Market News

The four major US stock indices are telling different stories today. The Dow industrial average is under the most pressure, the S&P 500 is modestly lower, and the Nasdaq Composite and Nasdaq 100 are trading higher.

Here is the snapshot:

• Dow industrial average: Down 473.64 points, or 0.90%, at 52,394.34.

• S&P 500: Down 10.18 points, or 0.13%, at 7,653.25.

• Nasdaq Composite: Up 57.33 points, or 0.22%, at 26,066.19.

• Nasdaq 100: Up 133.19 points, or 0.46%, at 29,091.88.

However, look underneath those headline numbers and the picture is less encouraging. Declining stocks outnumber advancing stocks across all four indices—even in the two Nasdaq indices that are trading higher.

Within the Dow, just five stocks are higher versus 25 lower. In the S&P 500,…

Brent prices are above $116 and more than 2.5% on the day as the market sniffs out a weekend attack on Iran.

The war hasn't gone to Trump's plan and Republican polling and approval numbers are dismal. In addition, Israeli PM Netanyahu is unlikely to remain Prime Minister after Tuesday's vote (odds around 30% of him remaining PM). 

Trump himself outlined the playbook 14 years ago:

The reports seem to indicate this will be a short-lived attacked perhaps aimed at pickaxe mountain and some missile sites. My best guess is that Trump attacks and then tries to declare victory early next week in order to reset the talking points in a deeply unpopular war. The problem is that oil prices aren't exactly cooperating at the moment and that's a tough…

• Prior was 46.3
• Prelim was 48.1
• Current conditions 46.7 vs 50.9 prior
• Expectations 48.4 vs 46.3 prior
• 1-year inflation 4.7% vs 4.7% prior
• 5 -year inflation 3.5% vs 3.5% prior

This indicator is near all-time lows but in the last number of years it's morphed into more of a political indicator than a spending one. The Fed still watches the inflation numbers though.

The University of Michigan’s Surveys of Consumers produces one of the oldest and most widely followed gauges of US household sentiment. Results come out twice a month, both at 10 am ET: a preliminary reading around mid-month and a final reading near the end of the month that incorporates the full sample. Revisions between the two are usually modest, but they occasionally shift the…

The AUDUSD has found support and resistance against two separate moving averages. They are providing the borderlines for both buyers and sellers now. 

The low for the week was on Monday.

Recall, that the AUDUSD has worked its way higher from Monday’s low near 0.6970, with buyers pushing back above a familiar swing area between 0.6989 and 0.6994.

That area is marked by the red numbered circles on the chart. The repeated highs and reactions tell traders why it matters. What had been a ceiling needed to be broken to give the buyers more control. Once above, that ceiling becomes a potential floor.

The break higher opened the door for a move toward the next key target: the 100-day moving average at 0.7032.

The buyers made their move. But at that…

Canadian consumers stepped up their spending in August. Statistics Canada reported retail sales increased 1.2% to $74.6 billion, with gains across all nine subsectors. The encouraging detail is that sales volumes also increased 1.2%. There was real buying behind the headline increase.

The strength extended beyond autos and gasoline. Core sales rose 1.1%, reversing July’s 0.7% decline, with food, general merchandise, and health and personal care retailers contributing. Gasoline was the exception to the volume story: receipts increased 1.7%, but volumes fell 0.5%, indicating higher prices drove that gain.

Quick analysis:

Today’s report gives the Canadian economy some better news, but the broader data are still telling a mixed story. The…

• Prior was 59.8
• Manufacturing 56.0 vs 55.5 expected
• Prior manufacturing 57.0
• Composite 57.6 vs 58.4 prior
• selling prices rose at the sharpest rate since August 2022
• New orders highest in over four-and-a-half years
• Business output expectations for the 12 months ahead cooled compared to September but were still the second highest seen this year

One of the big surprises last month -- and one that the market took as a hawkish signal at time time -- was the jump in this survey. Employment was at the strongest since June 2022 and input cost inflation at the highest since Oct 2022.

Chris Williamson, Chief Business Economist at S&P Global Market Intelligence:

In yesterday’s educational post, I discussed why gold was falling despite sharply lower Treasury yields. Lower yields would typically provide support for a non-interest-bearing asset like gold. However, the dollar was mixed, and gold’s inability to reclaim its hourly moving averages kept the technical bias tilted toward the sellers. The fundamental expectation needed confirmation from the price action. It did not get it.

Today, that technical story continued with a break below $4,000 before buyers finally pushed back.

In today’s video, I walk through the chart, the sequence of breaks, and the levels that will help determine whether this rebound can develop into something more.

The moving averages told traders who was in control

Earlier this…

The technology buyers had their shot on Wednesday. On Thursday, sellers took back control.

That is the backdrop heading into the final North American session of the week. U.S. stock futures are modestly lower after yesterday’s sharp declines in technology shares, Treasury yields are recovering some of their steep fall, and the Middle East headlines continue to keep the oil market on edge.

The dollar, however, is not moving in one direction against everything. It is higher against the EUR, GBP, JPY, CHF and AUD, but marginally lower against the CAD and NZD. With U.S. business surveys and consumer sentiment still ahead, there is another opportunity for the data to give traders the next shove.

In the morning video above, I take a look at the…

• The advance August reading was +1.3%
• Prior was -0.7%
• Sales up in all 9 subsectors, led by motor vehicles
• Ex-autos +1.2% vs +1.0% expected
• Prior ex-autos was -0.7%
• September advance sales +0.7%

The advance (or flash) reading is the real market mover in this report now as it generally corresponds with the final reading. The +0.7% m/m number for September is a good sign of ongoing strength.

RBC last week was out with its cardholder spending data for September and that's usually a good cross-check and precursor to the official report. It showed core sales up 0.5% m/m on strong discretionary categories.

With that, the market should feel increasingly comfortable that the Bank of Canada will hike rates next week, as is priced at just under 80%. What's…

Headlines:

• Falling Treasury yields may be hiding a darker story about the AI boom
• Crude oil extends gains as Saudi-Houthi conflict and concerns of US-Iran attacks keep the market supported
• Gold gets caught in market liquidation despite falling real yields supporting higher prices
• France October PMI slumps back into contraction as political uncertainty weighs on demand
• Germany October flash manufacturing PMI 54.2 vs 53.5 expected
• Eurozone October PMI misses estimates as growth slows, keeping ECB rate hike dilemma alive
• UK October flash services PMI 53.1 vs 51.8 expected
• UK retail sales fall more than expected in September, complicating BOE rate hike outlook

Markets:

• 10-year Treasury yields up 5 bps to 5.00%
• USD and CAD lead, CHF lags on the day
• WTI…

Zcash sold off sharply yesterday alongside many other cryptocurrencies as growth concerns led to widespread risk aversion.

The selling started late on Wednesday and then accelerated after The New York Times reported that the US and Israeli militaries had prepared detailed plans for potential strikes against Iran following the US midterm elections. The report also indicated that US was reinforcing its military presence in the region, with additional forces expected to be fully deployed by early November.

The risk of another direct confrontation between the US and Iran, combined with growing concerns about economic growth and the Federal Reserve forced to keep a…

Bitcoin erased all the weekly gains in the past couple of days as widespread risk aversion weighed on the crypto market. The risk-off flows started late Wednesday following reports that the US military was reducing its troop presence at bases in the Middle East, while the State Department ordered staff cuts at diplomatic posts amid rising security risks and the possibility of renewed military action against Iran.

The selling pressure then intensified after The New York Times reported that the US and Israeli militaries had developed detailed plans for potential strikes on Iran following the US midterm elections. The report also said that the US was building up…